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Beyond The Legalese

Be Aware: Mediator Confidentiality

4/20/2017

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We often recommend mediation to our clients – it often helps to resolve lawsuits quickly and efficiently.  However, there are some important issues to be aware when referring clients to mediation.  Most of these center around the mediation confidentiality agreement (MCA).
 
Obviously, mediation would not work without assuring confidentiality.  But often, parties sign away rights without realizing it when they sign an MCA.  That’s why it’s important before signing any MCA to ask questions about confidentiality and privilege:
 
  • What level of confidentiality does the MCA ensure?
  • What level of privilege does the MCA provide?
  • What level of admissibility is there for information divulged during mediation?
 
All these questions revolve around the nature of mediation: the process must be confidential, but if it is too well-shielded from the court system, then parties may be barred from using potentially valuable information following the mediation process.
 
The highest-profile example in recent years was a settlement agreement between the Winklevoss twins, Internet entrepreneurs who sued Facebook, claiming that during mediation owner Mark Zuckerberg had misled them about the value of their shares.  The court ruled that the Winklevosses’ information about the alleged fraud was inadmissible because it had emerged during protected mediation proceedings.
 
It’s crucial to understand exactly what is and is not permitted under the MCA.  As an attorney, you may even be barred from disclosing certain information to aid your client later on down the line if it was originally shared within the framework of mediation.
 
Different standards for confidentiality apply from state to state, so don’t make assumptions about which standard will apply.  Before entering any type of mediation, understand the protections extended automatically by virtue of the jurisdiction, as well as the specifics of the MCA. 
 
One useful change to a “standard” mediation agreement is to remove clauses referring to mediator conduct.  These often prevent attorneys from protecting their clients’ best interests in the event that the mediator fails to uphold professional standards.
 
None of this changes the value of mediation to save clients vast amounts of time and trouble.  Confidentiality will always be an essential part of mediation.  However, attorneys recommending mediation should be aware of jurisdictional rules, as well as of opportunities to modify a boilerplate confidentiality agreement to maximize clients’ rights and preserve potential future claims if any issues remain unresolved following mediation.
 
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Losing the Laches Doctrine: What Does it Mean for Patent Lawsuits?

4/5/2017

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A recent Supreme Court decision has eliminated one potential defense to damages in patent lawsuits. In March, the Supreme Court reversed a lower-court ruling based on a defense of laches.  The doctrine of laches is a common defense which allows a party to defend a lawsuit by establishing that the plaintiff did not act within a reasonable period of time, and therefore is not entitled to monetary relief. 
 
To some extent, this is common sense:  if someone owes you money, but it takes you ten years to get around to suing, they can probably argue that you waited an unreasonable amount of time.
 
In SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 580 U.S. _ (2017), SCA learned that First Quality was infringing its patent in 2003, but did not sue until 2010.  Given this delay, First Quality asserted a laches defense.
 
Lower courts agreed with First Quality’s claim that SCA had waited an unreasonable period of time to make its claim for damages.  However, the Supreme Court reversed, noting that the patent law expressly allows monetary damage claims for up to six years after patent infringement has taken place.  Because the patent statute provided a 6-year statute of limitations, no laches defense is available.
 
In its decision, the Supreme Court affirmed that laches is a “gap-filling doctrine,” not intended to override existing law.  The intention is to maintain checks and balances and avoid handing courts the power to override Congress.
 
Although the laches defense in no longer available against patentees seeking monetary damages, it is not eliminated from patent cases completely.  Laches is still available to defend against claims for equitable relief, such as injunctions and cease-and-desist orders.
 
There’s also still the defense of equitable estoppel in cases where one party acted in a misleading manner, e.g., knowingly concealed important facts from the other party, and the other party relied on the plaintiff’s misleading conduct by, e.g., investing in the production of infringing products. 
 
The Supreme Court decision has several broad implications.  First, it may increase the number of patent cases involving expired patents.  Second, it essentially affirmed that wherever Congress has established a clear statute of limitations for recovery of damages, the statute of limitations applies, not laches. 
 
Finally, if you’re concerned about trademarks, you can breathe easy.  Trademarks are governed by the Lanham Act, which does not have an express statute of limitations.  Thus, laches may still serve as a defense to a claim for trademark infringement.

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